Israel as Fossil-Fuel Giant: How Many Ways Could this Change the Game?

A preliminary geological survey has indicated that there might be about 26 million barrels of recoverable oil a mile under the sand near two kibbutzim in the northern Negev. That would amount to about $2 billion at current prices. There might be 12 million additional barrels further down.

This news comes a day after drilling began on the Leviathan, a record-setting exploratory well in a massive natural gas field off the coast of Haifa. The area is thought to contain 16 trillion cubic feet of gas, and it might also contain oil. The Leviathan is twice as big as the Tamar natural gas field struck last year, and the Tamar is already expected to produce enough gas to supply Israel for twenty years. (That’s a big deal: Israel has long depended on natural gas imports from Egypt; what little she had produced domestically pre-Tamar was expected to dry up in 2012.) If the Leviathan produces what is hoped, it might — typing this makes me feel a little giddy — turn Israel into a natural gas-exporting country.

So here’s the lowdown. Leviathan is 40%-held by Noble Energy, an American company. Twenty-three percent each are held by Delek and Avner, both Israeli companies. But the Lebanese government and Hezbollah are claiming that whatever the Americans and Israelis find off the Haifa coast actually belongs to them. Hezbollah, lest we forget, possesses long-range rockets. Green Prophet, an environmental and clean technology site, is worried: the destruction by terrorists — sorry, by Hezbollah — of the gas-producing rigs off Haifa could cause “an environmental catastrophe on a similar scale to the BP oil spill in the Gulf of Mexico.” That damage would be on top of all the other consequences of what would surely be a full-scale war.

Let’s imagine that the finds are as large as advertised and that they somehow avoid hostilities. I predict that the positive social impact to Israel’s economy and society will far outstrip the positive social impact following the exploitation of far larger reserves in the Gulf states, Iraq, Iran, Libya, etc. Will Israel’s ability again to “do more with less” lead to more resentment and envy from the “Arab Street,” or will it cause the people in these states to expect more of their own regimes? Unfortunately, I predict the former.

This gives Hezbollah another excuse to harass Israelis with its rocket projectiles. The Israelis should go through with the energy endeavour 100%, but they had better reinforce the northern part of the country with IDF armoured units to counter any aggression from Hezbollah.

However, when dealing with fossil fuels, the numbers are so large that it is often hard to keep them in context. According to this, Israel used 232,000 barrels per day in 2006. That means 26 million barrels is enough to provide about 110 days’ worth of oil for Israel alone.

In the U.S. we use about 18-20 million barrels per day, of which we currently import about 70% or 12-14 million barrels per day (bpd). Worldwide consumption is 86 million bpd, or about 30 billion barrels a year.

To be considered an oil “giant,” a field typically needs to be on the order of billions of barrels. The Leviathan field may come close. The article you linked to mentions a “17% probability” of finding about 3 billion barrels of oil there.

On natural gas, it’s even harder to keep the numbers straight, as we start dealing with trillions. The natural gas findings may be more significant than the oil findings. Israel used 1.19 billion cubic meters in 2008 according to the CIA World Factbook, or 44 billion cubic feet. 16 trillion cubic feet thus seems quite significant. However, Israel’s consumption of natural gas appears to be quite low compared to other countries, and has been growing rapidly in the last few years. Once natural gas becomes available as a national resource, it’s very likely to replace other fossil fuels such as oil and coal in certain applications, so usage will skyrocket.

Finally, many of the numbers announced in these reports are speculative and seem to be referring to the total geological amounts. Economically recoverable amounts are typically much lower; often less than 50% of what is in the ground is economically feasible to recover.

From what I understand, initial geological surveys often discover only small parts of actually larger hydrocarbon deposits. Peak oil predictions historically have been discredited by advances in technology that have enabled energy companies to drill further underground where further deposits have been reached. Hopefully this is the case with Israel, since it should do whatever it can to avoid dependence upon hostile theocratic states for fossil fuel.

One good thing about the Israelis, unlike America and the current administration, they will know how to make use of it. If we would only exploit our own natural resources or come up with legitimate alternative resources.

Imagine a world in which no one is dependent on Saudi Arabia, Kuwait, Hugo Chavez, Russia, etc. for their energy needs.

Busy, the oil find is indeed relatively small, but the significance of finding any oil inside Israel proper — which could suggest further deposits — is hard to overstate. But the natural gas find is much the bigger story. Israel will not be exporting oil anytime soon, but the Leviathan find is gigantic by anybody’s measure, and it makes exports a real possibility. Leviathan is double the size of the Tamar discovery, which was the biggest natural gas finding on earth last year. Noble is forecasting that between Leviathan and Tamar, Israel could have twice as much natural gas as the UK. And even Haaretz believes that Leviathan is in Israeli water.

Judith Levy: But the natural gas find is much the bigger story. Israel will not be exporting oil anytime soon, but the Leviathan find is gigantic by anybody’s measure, and it makes exports a real possibility. Leviathan is double the size of the Tamar discovery, which was the biggest natural gas finding on earth last year. Noble is forecasting that between Leviathan and Tamar, Israel could have twice as much natural gas as the UK. And even Haaretz believes that Leviathan is in Israeli water. · Oct 24 at 7:21am

Yes, the natgas discovery does seem quite significant. If I were Israel, I would keep it and not export it, as it is second only to oil as one of the most flexible and versatile forms of hydrocarbon energy.

Natural gas is one of the most common fuels for generating electrical energy. And in places like South Korea, for many years people have been able to buy “LPG” (liquid petroleum gas) cars, and the LPG filling stations are almost as common across the country as regular gasoline/diesel filling stations.

Standfast: Imagine a world in which no one is dependent on Saudi Arabia, Kuwait, Hugo Chavez, Russia, etc. for their energy needs. · Oct 24 at 7:05am

The irony is that dependence upon dictatorships for energy is not necessary in the long term. The U.S. could become a net exporter if only Congress allowed for the construction of further refineries and gave oil companies permission to drill in the ANWR, the OCS, and in the oil shale regions.

Standfast: Imagine a world in which no one is dependent on Saudi Arabia, Kuwait, Hugo Chavez, Russia, etc. for their energy needs. · Oct 24 at 7:05am

The irony is that dependence upon dictatorships for energy is not necessary in the long term. The U.S. could become a net exporter if only Congress allowed for the construction of further refineries and gave oil companies permission to drill in the ANWR, the OCS, and in the oil shale regions. · Oct 24 at 9:45am

The real point is not how much gas or oil a country has in total, because the commodity market is fugible. Long term you cannot control where stuff goes, nor can you control price.

The key is whether a country has strategic supplies at the margin (short and, in a crisis situation, medium term) so that targeted attempts to deny supply at the margin can impact marginal price or availability of energy. By finding some supplies that they control, Israel is insulated from the impact of crippling cutoffs and can thus plan long term.

Russia tried to influence German policy by cutting off natural gas supplies for a couple of days and it caused a crisis. They couldn’t do that for long, because Putin needs the money eventually. It was only a problem in Western Europe because they lack indigenous supplies to fill in when a gap occurs. Israel now could handle such a situation, just as gas shale finds in the US- with energy policy adjustments- could insulate us.

That’s why Woolsey and Zubrin are correct, and Jerry Taylor is out to lunch; in the long run, we are all freezing in the dark.